I wrote this for a friends blog a few weeks back, for those new to Ampleforth.
Thought this might be useful if you are new to DeFi and are trying to get your head around Ampleforth.
Ampleforth, yeah sounds like the butler from Downton Abbey! But what does it serve up you ask? Ok, stay with me. Ampleforth or AMPL is like no other crypto.
What is Ampl?
It’s one of the ‘New Kids on the Block’ of the DeFi craze, actually a subsection called EeFi, as it has an elastic supply!
Right let’s take this from the top. Ampl is a base money crypto coin, that is based on Hayek’s sound money principles. That being that it can’t be debased like FIAT but is elastic so it can expand and contract as supply demands.
It’s based on the value of the US Dollar from 2019, but, critically it is NOT a stablecoin.
Stablecoins like Tether are tied to the Dollar, which ironically makes them unstable, in that the Dollar is being debased hugely, thus so is Tether
The 2019 Dollar is an arbitrary marker, you have to start somewhere, but it is just a target. Ampl will fluctuate up and down from this figure.
Ampl effectively has a neutral zone between $0.96 and $1.06. If the price is above $1.06 Ampl rebases positively, if below $0.96, it rebases negatively. In the neutral zone there is no rebase.
Ok, are you still with me so far?
The rebase mechanism is crucial to understand. It will seem counter-intuitive but hopefully after this you’ll get it. The idea of the rebase is to push the price back towards $1 by adjusting to demand. If there is no demand and the price drops below $0.96 as an average price for the day then a negative rebase is calculated and that percentage of your coins is taken from your account.
Don’t panic, this is the whole supply contracting, so everyone’s account drops together. This will continue until demand returns and Ampl is bought in sufficient quantities to get back into the neutral zone or higher.
If higher, above $1.06 the opposite happens, the rebase is calculated and coins will be added to your account in this instance. The rebase is every 24hrs at 2am UTC.
Hopefully that all makes sense. So if you have 100 Ampl and the rebase is positive and, say 7%, at 2am UTC your account will adjust to 107 coins.
The rebase can potentially go deeply negative, but will never go to zero.
This is a game of patience and understanding. If you can’t handle the downs, don’t expect to enjoy the ups. Seriously if you are risk averse, I’d hold off. But if you’re like me, and like to participate – hey, who thought degenerate gambler – bit harsh, please
Seriously, it is both a coin to trade and long term a very good asset to hold in your portfolio.
In these early days you will see the most volatility as the coin matures. But long term the pressure is on the price continuing to rise as the market cap increases. So if you like to buy and Hodl and forget, Ampl will see you well.
For the trader in you, the elasticity in price is a gift. Buy low, sell high, rinse and repeat. But don’t get too greedy. When the coin price turns from one polarity to the other, it is rapid and will catch the unprepared.
So let’s have a little fun and discuss what you could gain.
Now remember kids, this is not financial advice. However I would only suggest something I’m prepared to do, or am already doing. So for total transparency I am in. I like the set up here.
Ampl had a huge rise in July when the positive cycle saw the market cap hit $700m and a whopping $4 a coin. But that rapid rise meant the flip saw a long and deep negative rebase in all of August, well until now.
This was hard on hodlers. Watching your coin count drop day after day was no fun. Many didn’t understand, they had FOMOed in on the hype, not understanding the dynamics at play. Buying high with the market cap at the high end. A harsh lesson served by ‘the Butler’.
But remember it was only a loss if you sold. Many did and the FUD was strong.
But you my friend, now have an understanding of what’s ahead, and the timing could be the best for someone new to Ampl. Why do I say this? Well. As mentioned above the negative rebase was harsh, but as of yesterday the pendulum swung and we are heading to our third positive rebase tonight 3am UK time.
If you like what you’ve heard, let’s have some fun.
Ok. Let’s just start with 100 Ampl.
Let’s suggest a month long rebase on average of 7%. Bear in mind in the last major positive cycle many days were between +10% and +15% with the strongest day getting to a wick hardening +24%!!!
So 100 x 30 days of 7% gives you 761 coins. Not bad eh! But also by then you could be looking at $3 a coin!!! So you speculated $75, and now it’s worth $2283, in a month!!!
Now you see the power of Ampleforth.
Don’t forget there are many stops. You may not time the top. It might not ride for 30 days. It might ride for 10 before refuelling, it might ride for 60!!! It might negatively rebase for longer. Nobody knows.
Although I have had fun with the price thus far, what is important is buying on Market Cap. You are buying a percentage that doesn’t change regardless of positive or negative rebase. So buy when the Market Cap is low and sell when high. Or just keep accumulating on the low for major long term gains.
What I would say is, if you miss your stop (or the top) and the drop is rapid, you would just have to wait for the cycle to come round again. The track is cyclical, do not panic, do not get off at the wrong stop (sell low), just wait.
Hopefully you’ve enjoyed my mixed analogies, and have gained some understanding of Ampleforth along the way.
Remember Ampleforth is trying to redefine money in a way that is fair to all. It has some great potential. It has some solid backers too, including Brian Armstrong CEO of Coinbase, who only a week ago listed Ampleforth as one of the new breed of coins looking to be listed in Coinbase. There have been rumours of Binance too! Even Tyler Winklevoss tweeted ‘List Ampleforth’ was he suggesting his Gemini exchange????
I can see Ampleforth serving you up a beer at least, but it could be champagne.
Enjoy your travels.Recommend0 recommendationsPublished in